Labour shortages will last well into 2022

The widespread labour shortages evident in the survey data and job opening & quit rates are only partly due to transitory factors, including enhanced unemployment benefits, childcare constraints, and virus fears. Limited international migration, the wave of retirements and mismatches in the labour market appear to be playing a bigger role and will last well into 2022. That will put sustained upward pressure on wages, which is a key reason why we expect core inflation will average 2.5% over the coming years.
Michael Pearce Senior US Economist
Continue reading

More from US

US Economics Weekly

Powell gets the nod; GDP growth rebounding

The announcement on Monday morning that President Biden would nominate Jerome Powell for a second term as Fed Chair was largely as expected, although the unexplained delays in making it official may have persuaded some in the markets that Biden was leaning toward picking Lael Brainard instead. As far as monetary policy goes, Powell and Brainard hold very similar, largely dovish, views. Elsewhere, as a result of the flurry of economic data releases ahead of the Thanksgiving Holiday we have raised our fourth-quarter GDP growth forecast to 6.5% annualised, from 4.0%.

24 November 2021

US Data Response

Durable Goods, Adv. Trade (Oct.), GDP (Q3 2nd Est.)

The 0.5% fall in durable goods orders was not as bad as it looked, given that it was entirely due to a fall in volatile aircraft orders. But the bigger news this morning was the huge 10.7% m/m surge in exports in October, which is why we now estimate that GDP growth will accelerate from 2.1% annualised in the third quarter to more than 5% in the fourth, well above our previous forecast of a rise to 4%.

24 November 2021

US Employment Report Preview

Slowdown ahead

We expect non-farm payrolls to have risen by a solid 500,000 in November, but the growing risk of a winter COVID wave and a dwindling supply of available workers look set to weigh on employment growth soon.

24 November 2021

More from Michael Pearce

US Economics Weekly

Lasting price pressures building

The continued surge in prices last month was again mostly concentrated in sectors reopening or facing intense supply constraints, which allows the Fed to stick with its “largely transitory” story for now. But with signs of cyclical price pressures building and the extremely strong job openings and quits figures pointing to stronger wage pressures, we believe the Fed will eventually have to acknowledge that inflation will remain elevated for much longer.

11 June 2021

US Data Response

ISM Manufacturing Index (May)

While the headline ISM manufacturing index edged up to 61.2 in May, from 60.7, the main takeaway from the release was that shortages of workers, and not just raw materials, now appear to be playing a key role in holding back production and pushing up prices.

1 June 2021

US Economics Weekly

Fed remaining dovish as supply-side constraints mount

In a relatively quiet week, the few data releases we did get added to signs that shortages are pushing up prices further and restraining the pace of economic recovery.

21 May 2021
↑ Back to top